<B> E-Tix Erase Borders</B>
<I>Corps. Use International E-Tix To Ease Cross-Border Ticketing</I>
By Jay Campbell
The spread of electronic ticketing on international routes is further threatening the traditional notion that tickets must be purchased in a traveler's country of origin, and creating opportunities for travel managers and agents to reduce air fares using cross-border ticketing.
It remains unclear, however, whether the practice violates airline or government regulations, and if so, whether officials can or will enforce those regulations.
Cross-border ticketing in this way is not new. In the 1980s, for example, Thomas Cook made a regular practice of shipping the low, directly negotiated consolidator fares in its Airfare Warehouse in England to travelers based in the United States.
"They would overnight mail us the tickets, and we'd pay by some intra-company settlement method. It would be a combination of one-ways, so it looked like it could be originating on the other side. But the disadvantages were that we had to pay for overnight shipping to get the tickets there on time," said John Heilner, a former Cook executive who is now a consultant with Management Alternatives in Stamford, Conn.
Corporate travel managers have faced those same issues for years, and continue to do so where e-ticketing is not yet available. They said that the time and cost required to overnight paper documents,--including prepaid tickets--and the risk that the traveler could change his plans and require a refund, has often defeated the purpose of cross-border ticketing.
Where it is viable, however, the savings can be tremendous. In one scenario, travel managers might have reservations made and e-tickets issued in Country A for a traveler in Country B because the company's discount deal or the agency's override agreement is better in Country A.
Of course, this requires open communication among the travel departments and agency personnel in different regions, not only because the volume of one is shifted to the other, but also because the players will have to work out issues about charging back the cost of travel to the correct units in the correct countries.
"You need to be a company that thinks ahead," said Joe Broessler, director of international rates and tariffs for Hickory Travel Systems in Saddle Brook, N.J. "If your guy in London doesn't want his volume moved to your New York City office, you're going to have a problem."
Also, it must be assumed that the region whose volume is being diluted likely will not fulfill any airline deal of its own, nor see a new offer for next year. The agency's performance in airline contracts, too, would be affected.
A second tactic puts less risk on negotiated arrangements. It involves taking advantage of the airlines' directional fares--fares that vary by point of sale even on the same route--which create opportunities for one-way savings depending on where they are ticketed. The savings can amount to thousands of dollars per ticket, according to Broessler.
One travel manager, requesting anonymity, told BTN that she has been issuing open one-way tickets in Canada for her travelers based in the United States, and is saving up to $3,000 on some premium class trips. In the United States, she also does all reservations and ticketing for the London office.
"Have we been caught? No," said the travel manager. "Will we? Probably. We tell the travelers to remember that they're supposed to be originating in Canada in case the airlines ask them. But if we do get caught, we will assume all responsibility for any reproach from the airlines."
In either of the two scenarios, perhaps more likely the former, the airline could realize what's happening and take action.
"Where we detect it, we'll take action in the form of a debit memo," said Chris Bowers, United's senior vice president for North America. "We haven't noticed it happening particularly with e-tickets, but it's no less detectable."
According to Broessler, "These are good ideas, but you've got to make sure you ticket in the same location you make the reservation, or the airlines may catch you. If the same agency does the reservation and the ticketing, it's 1000 percent legal."
In the first scenario, an airline could simply notice that a client's deal in one country is seriously underperforming, while another is overperforming. But some, and perhaps all, airlines are not yet that sophisticated in terms of communication among their worldwide divisions. Further, if self-interest is the priority for the sales rep on the winning side, he would have no reason to point out the shift.
According to travel managers, this lack of coordination has prevented airlines from offering a discount for all of a given company's travel, no matter what the point of origin. Cross-border ticketing, then, is a way to make up for that lack of global view.
"I think this is a clear case of technology outpacing current regulations," said Andreas Wellauer of Galiant Consulting in New York, publisher of the daily Galiant Desknotes. "The International Air Transport Association's official position is that it is left to the individual airlines to allow or deny it. The airlines are saying that they do not know where a customer prints a ticket, and hence they are not really getting involved. So it's unclear what regulations apply."
The Airlines Reporting Corp. also is not taking an official position, a spokesman said. The issue was brought up at an ARC meeting last year but was tabled.
Wellauer said he learned that the European Union is preparing a discussion paper on European e-commerce which will be used as a basis for new European regulations in this area. Wellauer was told that the EU is interested in receiving a position paper from the International Business Travel Association on the issue.
"No one will go to jail for this," Heilner said. "In the 1980s, when airlines needed help on a certain route, they would look the other way from such practices. If we see a slowdown in travel, I'm sure there'll be more of it."
Broessler pointed out that the opportunities for cross-border ticketing will only expand as the use of electronic tickets spread throughout the world. Agents could find themselves e-ticketing in the United States for travel that occurs inside of Europe, or from Europe to another continent.
"On the other hand," warned Heilner, "as airlines think more globally, it could become harder and harder to get away with."
Or perhaps, Broessler said, it may nudge the carriers to finally offer what travel buyers have been demanding: "the same percentage off every ticket your company buys from that airline in the world.